Why SME Financing Is Back On The World's Radar
This World Bank and IMF just completed their Annual Spring meetings in Washington, DC. Legions of finance officials from around the world descended upon DC – ostensibly to discuss important issues like job creation, a skilled workforce and fintech's global growth. Unfortunately, tariffs and concern about the overall global economy instead dominated the headlines.
The importance of supporting the world's Small and Medium Enterprises (SMEs) has once again become apparent. In a period where multinational corporations are concerned about reshoring, tariffs and political nationalism, SMEs will be critical source of job creation, innovation and local economic growth. But they need financing.
New models, such as Liquida Capital, and institutional models, such as the International Finance Corporation's SME Finance Forum, are stepping into the void to provide SMEs with access to important resources to start, grow or scale their businesses. And not a moment too soon. Recent data from Pitchbook shows that 71% of venture capital in the Q1 2025 went to artificial intelligence, which, while important, is not the focus of the vast majority of SMEs. In addition, private investors returned to investing in SMEs in the friendly confines of California, Massachusetts and New York, rather than looking at SMEs around the United States and world.
IFC SME Finance Forum 2024 in Brazil
In the United States, an interesting model is that of Liquida Capital. Its founder, Andre Dowdell, is a serial entrepreneur who bootstrapped various businesses to success. His frustration with the way that America finances its SMEs – through banks with conservative lending policies or venture capital that is limited to certain cities and sectors, led him to start Liquida Capital. The group connects SMEs to many different sources of capital across the country to find the best, and most willing partner. In 2024 alone, Dowdell and Liquida Capital helped SMEs in the United States raise over $50 million in capital. Since its inception, it has helped over 1500 SMEs in America to access capital for launch or growth.
Liquida solves several important challenges facing the small business sector in the United States. Recent changes to the Small Business Administration by the Trump Administration have reduced the amount of SBA-backed loans available around the country. Major banks and community banks relied on these guarantees to support new entrepreneurs. And private investors, like venture capitalists, almost never invest in non-technology or non-science-based businesses. But if an SME is willing to look beyond the narrative of VC as the only option, there is still significant amount of capital in the system. Companies that leverage a broader market to identify willing lenders and investors beyond the reach of the SME geographically or by sector.
Liquida Capital Logo
At the international level, the International Finance Corporation, and the G20 nations, created the SME Finance Forum to address systemic global challenges to the financial system. They are comprised of SME-focused institutions providing and enabling finance and services- banks, non-banks financial institutions, fintech, payment platforms, development institutions, credit guarantee companies, insurers, investment funds, supply chain linked players, banking and SME associations, policy advocates, regulators, academia, consulting houses, knowledge aggregators. SME's everywhere face the same challenges of access to capital, regulatory burdens and difficulty expanding across borders. The SME Finance Forum has created a network of banks around the world to synchronize lending policies, as well as a set of fintech's that are using traditional capital, crypto and blockchain to improve lending. According to the Forum, fintech is now the leading source of capital for SME's worldwide – as measured by the number of SMEs and not by amount of capital. According to Qamar Saleem, CEO of the SME Finance Forum, 'The SME Forum is proud to work with capital providers around the world, particularly emerging fintech, to support businesses of all sizes'.
What path will new entrepreneurs follow? At a startup showcase associated with the World Bank Spring meetings, entrepreneurs talked about the never-ending search for capital that is now stretching across banks, family offices, investors and economic development funds. From biotech startups with intellectual property to small businesses in traditional sectors like transportation, construction and consulting, nobody has found a better way than dialing for dollars in a haphazard manner. For those in the United States, platforms like Liquida Capital provide a new channel through which to find capital and build upon pre-existing lending platforms that have been successful for consumers but not SMEs. Globally, the SME Finance Forum seeks to start a similar discussion but to also include new players in fintech and block chain. The success of these efforts may make life much easier for SMEs in the years to come.
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